Region bucks trend amid drop in UK growth

Region bucks trend amid drop in UK growth

Greater Birmingham businesses remain bullish despite a drop in UK growth in the first three months of this year.

Despite reports from the Bank of England that growth has continued to slow in the second quarter of the year, 63% of businesses in the Greater Birmingham area are expecting turnover to increase in the next year.

It is believed that slow growth has been caused by uncertainty over the EU referendum.

The Bank kept the interest rate at 0.5 per cent, remaining the same level since March 2009.

CPI inflation increased to 0.5 per cent in March but remains well below the 2 per cent inflation target, The Bank of England blames this is on drags in energy and food prices, though these are expected to fade in the next year.

Growth also improved in the Euro zone in the first quarter of the year, and sentiment in global financial markets has improved, with prospects in China and other emerging economies improving slightly.  

Stephanie Wall, senior policy and patron adviser at Greater Birmingham Chamber of Commerce, said:  “The decision by the Bank of England to keep the interest rate at 0.5 per cent is not unexpected, as inflation remains under the target of 2 per cent. 

“While sentiment in global markets has improved slightly, it is disappointing that growth in the UK has slowed. 

“Nevertheless our Quarterly Business Report for Q1 demonstrated that Greater Birmingham businesses remain bullish, with 63 per cent expecting turnover to increase in the next 12 months. 

“Businesses increasing investment intentions also rose by 10 per cent. 

“It is great to see our businesses are still feeling confident. However the Bank of England does highlight that uncertainty around the EU Referendum is impacting business activity.  We will continue to monitor business sentiment as the Referendum looms, and our survey for business sentiment in Q2 is shortly to take place.”